Tag: SEBI

Sebi asks Sahara MF to wind up all schemes

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Markets regulator Sebi on Wednesday asked Sahara Mutual Fund to wind up all its schemes.

All schemes, except one, have to be wound up by April 21, 2018. However, the fund house has been allowed to continue its Sahara Tax Gain Fund’ till July 27 but without accepting any new investor. This particular scheme has to be wound up by August 27, 2018.

Sahara group has been engaged in a long-running regulatory and legal battle with Sebi ever since the regulator ordered refund of a massive amount of over Rs 24,000 crore by two Sahara entities.

In July, 2015, the Securities and Exchange Board of India (Sebi) had cancelled the registration of Sahara MF saying it was no longer “fit and proper” to carry out this business and ordered transfer of its operations to another fund house. It had directed cancellation of Sahara MF’s registration on expiry of a six-month period.

Earlier, Sebi had also cancelled the portfolio management licence of a Sahara firm.

Following the Sebi order, Sahara MF had approached Securities Appellate Tribunal (SAT), which granted six weeks to the appellants to approach the Supreme Court. Subsequently, Sahara MF had filed an appeal in the Supreme Court. The appeal was dismissed by the apex court in October 2017.

Therafter, Sebi had instructed Sahara MF to strictly comply with the timelines specified in its July 2015 order.

In its submission to Sebi, Sahara MF said that implementation of the timelines specified in the July order could lead to denial of benefits to the investors of Sahara Tax Gain Fund’ and may not be in the interest of investors.

Accordingly, the regulator has modified its earlier order and now asked Sahara MF “to wind up all its schemes (other than Sahara Tax Gain Fund’) by April 21, 2018.”

Besides, Sahara MF has been granted time till August 27, 2018 to complete winding up of the Sahara Tax Gain Fund’.

“Sahara MF is directed to surrender the certificate of registration to Sebi by August 27, 2018,” Sebi noted.

The trustees of Sahara MF and the Registrar and Transfer Agent Karvy Computershare have been directed to ensure that contact details and the bank details of all the investors of Sahara Tax Gain Fund’ are updated so that redemption proceeds can be sent to the investors without any delay.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Sebi exempts trust linked to Alembic Pharmaceuticals and Alembic from open offer requirement

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Markets regulator Sebi has exempted a private family trust related to the promoter group of Alembic Pharmaceuticals and Alembic from making open offers following proposed share transfers.

Laksh Trust, through separate applications, had sought exemption from the obligation of making open offers post acquisition of certain number of shares in Alembic Pharma and Alembic.

Chirayu Amin and Malika Amin are trustees of Laksh Trust.

Malika Amin, one of the promoters, holds 1.59 percent and 2.25 percent stake directly in Alembic Pharma and Alembic respectively.

She also holds shares in these four companies — Nirayu Pvt Ltd, Whitefield Chemtech Pvt Ltd, Sierra Investments Pvt Ltd and Sherno Ltd. These four firms are promoter group entities of Alembic Pharma and Alembic.

Under the proposal, the trust will acquire shares in the four promoter holding companies from Malika Amin.

Post completion of the proposed acquisition, the trust would become part of the promoter entities in both the companies.

Granting exemption, Sebi, in two separate orders, said the proposed acquisition is part of internal re-alignment of holdings within the promoter group family and there would be no change in control of both the companies following the proposed acquisition.

“The proposed acquisition is further to an internal reorganization within the promoter family and is intended to streamline succession and promote welfare of promoter family,” Sebi said in similar-worded orders dated April 6.

While providing the exemption with certain conditions, the watchdog also said the proposed acquisition should in accordance with the relevant provisions of the Companies Act and other applicable laws.

Subsequently, the trust is required to file a report with Sebi within 21 days.

Under takeover regulations, acquisition of shares beyond a certain threshold triggers the open offer obligation.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Why Sebi barred foreign portfolio investors from executing non-disposal undertakings

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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On March 14, 2018, capital markets regulator Securities and Exchange Board of India (Sebi) issued an informal guidance to UBS AG, a Sebi-registered foreign portfolio investor (FPI), clarifying the position on whether non-disposal undertakings (NDUs) constitute an ‘encumbrance’ under the Sebi (Foreign Portfolio Investors) Regulations, 2014, or FPI Regulations.

Regulation 32(2)(d) of the FPI Regulations imposes an obligation on the designated depository participant engaged by an FPI to ensure that equity shares held by an FPI are free from all encumbrances.  Therefore, as FPIs are not permitted to pledge shares, they execute NDUs to avail finance. An NDU is an agreement between a shareholder and a third party, usually executed in relation to any credit facility availed by the shareholder, wherein the shareholder undertakes to not dispose the shares during the existence of the agreement.

Safeguard for Creditors

An NDU assures the creditor that the debtor will not transfer the shares held by it by way of outside arrangements and leave the creditor without access to the assets of the debtor. Pursuant to executing an NDU, the shares are transferred to an escrow demat account but the beneficial interest in over the shares will remain with the debtor. The creditor will not be able to dispose off the shares to clear dues, like in the case of a pledge.

In the present matter, the applicant issued NDUs to avail finance or to enter into certain commercial contracts. However, it was unclear if issuing NDUs will amount to the creation of encumbrances as the FPI Regulations do not define the term encumbrance.

The Sebi (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SAST Regulations) lay down an inclusive definition of encumbrance. It is defined as to include a pledge, a lien or any such transaction, by whatever name called.

With respect to NDUs, it is clarified in the FAQs to the SAST Regulations that NDUs executed by promoters will be covered within the scope of encumbrance for the purpose of disclosure obligations. However, the applicant is not a promoter of any listed company.

Finally Some Clarity!

In light of the above, the applicant requested guidance as to whether the term encumbrance in the FPI Regulations would include NDUs executed by FPIs who are merely investors/acquirers and not promoters. The applicant also sought to know if FPIs are restricted from providing a limited undertaking to not transfer, dispose of, or create any encumbrances over the equity shares held by them without creating any rights in favour of the third party.

Sebi took a view that the term encumbrance used in Regulation 32(2)(d) of the FPI Regulations would include NDUs. Therefore, FPIs are restricted from executing NDUs and create an encumbrance over equity shares held by them in listed companies in India.

Currently, the FPIs are circumventing the FPI Regulations by executing NDUs to avail credit facilities as there is uncertainty on whether NDUs create encumbrances. By clarifying the position on NDUs, this informal guidance has provided much-needed clarity to the FPIs and the designated depository participants on the correct position of law.

Sandeep Parekh, is the managing partner of Finsec Law Advisors and Raghu Meka is an associate at Finsec Law. Views are personal.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Municipal bodies need to tap bonds, ad fees to fund development of cities, says JLL

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Municipal bodies will have to find new ways to raise funds for development of cities, property consultant JLL has said and suggested that options like bonds and advertisement fee could help generate 30% of the capital required.

In its latest report Municipal Finance: Funding Urban Development in India’, JLL said that over 140 cities can raise development capital through the issuance of municipal bonds.

Municipal bodies have to find new ways of raising capital to sufficiently fund their endeavours, it said. “A solid financial structure is essential to the success of cities in meeting the growing needs of urbanisation.”

The report added that the traditional forms of revenue generation “like taxation and grants no longer suffice the scope, expanse and speed for the required development”.

Municipal bonds are financial instruments issued by urban local bodies to raise money for specific infrastructure projects.

SEBI regulations (2015) regarding municipal bonds state that municipalities must not have negative net worth in any of the three preceding financial years, and also there should not be any default in any loan repayments in the last one year.

One of the ways to determine a city’s financial health is through credit ratings. The government has initiated credit ratings to evaluate the credit worthiness of every possible local town.

“Non-traditional forms of raising capital including Municipal Bonds and alternate revenue streams such as advertisement tax and user fees can provide additional capital up to 30% of the total requirement in various urban centres in the future,” said Shankar Arumugham, Chief Operating Officer, Strategic Consulting, India and Sri Lanka, JLL.

The report also estimated that as much as Rs 25 crore can be raised annually through advertising fees by municipal bodies of metropolitan cities of India.

“Advertising fees are trending as a key instrument for revenue augmentation in the urban centres of India. The advertising fee, or revenue collected through the leasing of advertisement rights on assets owned by various government agencies, have the potential to be a game changer in the near future,” the report said.

JLL said that India’s urban centres are growing at a rapid pace, but this growth is causing significant strains on urban infrastructure and services, where massive upgrades are needed.

“This has necessitated local governments to consider planned urbanisation and peripheral expansions that would need a steady stream of revenues greater than what is generated currently by most urban centres,” it said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Fund-raising via NCD drops 83% to Rs 4,975 crore in FY 18

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Indian companies raised Rs 4,975 crore by issuing non-convertible debentures (NCDs) to retail investors in 2017-18 to meet their business requirements, a plunge of 83% from the preceding year.

In 2016-17, firms had mobilised Rs 29,558 crore through this route, according to latest data with the Securities and Exchange Board of India (Sebi).

Overall, in terms of volume, there were seven NCD issues in the recently-concluded fiscal as against 16 in 2016-17.

The companies raised money for funding expansion plans, retiring debt, supporting working capital requirements and other general corporate purposes.

NCDs are loan-linked bonds that cannot be converted into stocks and usually offer higher interest rates than convertible debentures.

Market analysts said fund-raising via NCDs was less compared to the preceding financial year as the companies preferred initial public offering (IPO) and qualified institutional placement (QIP) route to garner funds.

Companies mopped-up a record over Rs 84,000 crore through IPOs in last fiscal and more than Rs 62,000 via QIPs.

In the previous fiscal, Kosammattam Finance went for NCDs twice to mobilise capital and raised over Rs 443 crore.

Individually, Muthoot Finance raised a total of Rs 1,969 crore through this route against a target of Rs 200 crore, Mahindra & Mahindra Financial Services garnered Rs 1,150 crore against a base size of Rs 250 crore.

Besides, Srei Equipment Finance mopped-up Rs 562 crore against the base size of Rs 500 crore, Edelweiss Retail Finance raked in Rs 500 crore as compared to the target of Rs 250 crore and Srei Infrastructure Finance garnered Rs 351 crore against base amount of Rs 200 crore.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Sebi may impose trading ban on companies under insolvency proceedings

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Securities and Exchange Board of India (SEBI) will be holding a crucial board meeting today. CNBC-TV18 learns that the market regulator may be imposing a trading ban on companies that are undergoing insolvency proceedings.

Sandeep Parekh, Founder, Finsec Law Advisors said that the regulatory body is looking to give relaxations to many companies.

They are probably going to look at whether the trading should be suspended in these companies, he stated.

Parekh further added that Sebi will not be required to amend the current law in order to take a decision on suspension adding that they could be taken under its existing regulatory framework.

However, the larger question is whether it should suspend these companies or not. “I don’t think trading should be suspended”, said Parekh.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bond market regulations likely to pull up markets in near future: India Ratings

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A downward trend in the primary corporate bond market could be because of the sharp rise in bond yields and tepid demand for non-working capital financing, an Indian Ratings and Research report said.

The report says the bond market will be majorly guided by the regulatory push to reinvigorate the bond market.

In Budget 2018, Finance Minister Arun Jaitley announced two regulations in the bond market. One was the 25% borrowing by the large borrowers through the bond market and the other was pension funds and insurance companies being allowed to invest in “A-rated” bonds which will further bring developments in the bond market.

The Securities and Exchange Board of India (Sebi) Chief Ajay Tyagi said they will announce further regulations in the bond market by September, according to The Business Standard.

In a relief to the current downtrend in issuances, the report says that the short-term money market (both commercial paper (CP) and certificate of deposit) have risen. This, it points, was possible because the short-term money market was backed by a surge in working capital demand.

On CP Issuances, the report says that it is likely to remain stable as it is driven by the disruption in the working capital cycle after the Goods and Services Tax rollout which will soon be resolved, the rapid increase in economic activities, rise in input cost prices and seasonal demand.

The report points that mutual fund debt assets under management (AUM) will play a major role in pulling up the corporate bond curve as a large build-up in debt mutual fund AUM has been a major driver for non-government bond curves so far.

The report reasons that in addition to the drying up of the banking sector’s liquidity, a sharp rise in the interest rate will cause stickiness of the funds and hence, the mutual fund AUM will be key in determining non-government bonds’ yields curves.

On non-public sector undertaking corporates, the reports said that they will remain stable as relatively lesser issuances by them will alleviate pressure on their bond yield curve.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

SEBI tightens the noose on leakage of confidential information

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Securities and Exchange Board of India (SEBI), the market regulator is keeping a tight check on the leakage of confidential information of companies in the wake of unpublished financial results finding their ways into Whatsapp groups.

The regulator has asked the companies to frame a policy with regard to their sensitive information.  It also demanded that the companies convey the policies to employees, monitor price changes before important events like earnings releases; conduct background checks of employees dealing with such vital information.

Sebi formed a committee, led by former law secretary T.K. Viswanathan to review its rules on insider trading and unfair trading practices. It is expected to submit a report next month.

Previously, SEBI had passed orders against Axis Bank Ltd, HDFC Bank Ltd, Tata Motors Ltd and Bata India Ltd., asking them to conduct inquiries.

On March 9, a report from KPMG stated that companies need to control the number of employees with access to confidential information.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow